PIC Greenlights R23 Billion Barloworld Acquisition Proposal

The Public Investment Corporation (PIC) has confirmed its endorsement of Newco’s proposed R23 billion acquisition of Barloworld.

As one of South Africa’s prominent asset managers, the PIC has officially agreed to accept the standby offer for 41.6 million ordinary shares of Barloworld. This represents around 21.93% of the company’s total issued shares.

If Barloworld remains listed on the stock exchange, the PIC may retain a portion of its shares to fulfill its internal index weighting requirements.

​The R23 billion acquisition of Barloworld by a consortium headed by CEO Dominic Sewela and Saudi Arabia’s Zahid Group commenced in late 2024. The consortium, established under a new entity named Newco, has declared its strong intention to purchase all issued shares of Barloworld, with the exception of those held by excluded shareholders.

Read:

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This latest commitment elevates the total support for the standby offer to 46.93% of Barloworld’s ordinary shares, excluding treasury stock. This includes commitments from other shareholders as well as the consortium and the Barloworld Foundation’s holdings.

The PIC’s backing is expected to greatly enhance Newco’s takeover ambitions, which could reshape the South African industrial sector if successful.

Newco is dedicated to a BEE arrangement

In a bid to gain the PIC’s favor, Newco has pledged to implement a broad-based black economic empowerment (BEE) deal following the intended acquisition and delisting of Barloworld.

Read: Barloworld R23bn buyout proposal: Governance response regarded as ‘unconvincing’

The 13.5% BEE transaction is planned to be executed once Barloworld is delisted from the JSE and A2X, aiming to fulfill the PIC’s wider public interest considerations concerning the R23 billion offer.

However, Newco’s commitment to the BEE transaction hinges on attaining complete control of Barloworld.

If the stipulation for 90% shareholder approval of the standby offer is waived, and fewer than 90% of independent shareholders accept the offer, Barloworld will remain publicly listed. Consequently, the BEE deal would not move forward, as it is considered impractical while the company is still publicly traded.

Read: Major Barloworld shareholder rejects R120 offer, seeking R130

The PIC has previously voiced its concerns regarding the takeover, highlighting issues related to corporate governance and the practices employed by Barloworld’s board during the evaluation of the transaction.

Newco has also committed to voluntarily presenting the BEE transaction to competition authorities throughout the merger process. Neglecting to do so may result in the PIC withdrawing its support for the deal.

Listen: M&A update: Bidvest, Barloworld, and Limpopo Refinery

Barloworld’s share price closed up by 2.9% at R109 on Wednesday.

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